• Tesla grants Elon Musk a new pay package worth $29 billion consisting of 96 million restricted shares.
• The award follows a court ruling that voided Musk's previous $50 billion compensation after deeming it unfair to shareholders.
• Musk must stay in a top executive position for two years for the shares to vest, with a five-year holding period required.
• The decision comes as Tesla shifts focus to robotics and AI, amid a 25% decline in its stock this year.
• The board emphasizes the need to retain Musk amidst an intensifying talent war in the AI sector.

Tesla has approved a substantial stock award for CEO Elon Musk, granting him approximately $29 billion in shares as part of a strategy to retain his leadership amid ongoing legal disputes concerning earlier compensation packages. The new award consists of 96 million shares classified as a "good faith" gesture while Musk continues to appeal a Delaware court ruling that invalidated a $50 billion pay package from 2018, which was deemed unfair to shareholders and involved procedural flaws in its approval process, according to Reuters, Business Insider, and LA Times.

The Tesla board expressed that the recent payout aims to ensure Musk's continued focus on the company, especially as it pivots from its traditional electric vehicle business towards advances in AI and robotics. In a letter to shareholders, board members Robyn Denholm and Kathleen Wilson-Thompson highlighted that retaining Musk is critical for creating continued value amidst escalating competition for AI talent, referencing recent high compensation packages in the tech industry, according to BBC, The Hill, and HuffPost.

The newly structured package allows Musk to claim the shares only if he remains in a top executive role for at least two more years. The shares are priced at $23.34 each, the same as in the voided 2018 agreement, and will require a five-year holding period. This measure is designed to prevent Musk from benefiting from both the new and potentially reinstated old package, thereby eliminating the possibility of a “double dip,” according to South China Morning Post and CBS News.

Despite the lofty compensation package, Tesla faces significant challenges, such as an ongoing decline in stock value due to market conditions and the fallout from Musk’s political endeavors. While quarterly profits fell dramatically, Tesla's board remains optimistic about Musk’s vision for the company's transition into new technology realms, as highlighted in communications emphasizing Musk's unique capabilities in navigating complex challenges ahead, as reported by Anadolu Agency and India Times.